The Small Business Innovation Research (SBIR) program has been reauthorized for six years. The program had been hanging on through several short term continuing resolutions. The Senate and the House Armed Services Committees announced that they have agreed on a long-term reauthorization of the SBIR program during conference negotiations on the Fiscal Year 2012 National Defense Authorization Act (NDAA). President Obama is prepared to sign the bill when it reaches his desk.

Award amounts will be increased. Small businesses will face less uncertainty because the reauthorization requires most agencies to complete their review process for applicants within 90 days.

Funding increases from 2.5% to 3.2% of each agency’s extramural research budget for the SBIR program and from 0.3% to 0.45% over the course of reauthorization for the Small Business Technology Transfer (STTR) program. Contract amounts are increased from $100,000 to $150,000 for Phase I awards and from $750,000 to $1 million for Phase II awards. Performance-based standards are introduced to encourage companies to focus on commercialization through Phase III.

A compromise has been reached which allows venture backed companies to participate in 25% of awards for NIH, DOE, and NSF and 15% of awards for other federal agencies.

A number of our high tech and life sciences clients have been able to launch new product lines through SBIR grants. The reauthorization should maintain the vitality of the program.

This course will enable the non-copyright specialist to better understand what copyrights are and what copyrights can do for clients in the arts. It will address the strategic advantage of copyright registration, exploiting different rights in one work, and how to make agreements so that both creators and buyers will know who will own what. 1 hour General Participatory MCLE credit.

About the Speaker: Robert Cogan is Principal Attorney at Continuum Law in San Diego. In the course of his extensive experience, he has had responsibility for the worldwide patent, trademark, and copyright portfolios of public companies and for protecting rights of software companies. He also works with individual artists in visual arts, web design, and music. Mr. Cogan received his law degree from the George Washington University National Law Center.

Legal protection for sensitive computer files has been strengthened by a new decision from the Ninth Circuit Federal Court of Appeals.1

The Risk

Imagine this scenario: Your computer programmer remotely downloaded sensitive files before dawn. On arriving at the office, the programmer resigned without notice. The Navy awarded you a desirable contract because those sensitive files provided you with a unique capability. Now you find out that the programmer will be consulting for a competitor who wants to take the place of your company when the contract is up for renewal. What can you do? What could you have done to discourage or prevent this?

Trade Secret Law Protections

There are many deterrents and remedies available under trade secret law. A trade secret owner can seek money damages and can often seek an injunction to prevent use of the trade secret by others. Requirements for making out a case can include showing that the material taken was in fact confidential, it provided some business advantage, and that the owner took all proper steps to protect the information. Requirements are simpler if a company can seek recovery based on the elements of an employee’s unauthorized taking or damaging of sensitive data after gaining authorized entry into the computer. Federal law provides for recovery based on these elements.

The Computer Fraud and Abuse Act

One of the most effective tools in dealing with the risk described above is the Computer Fraud and Abuse Act2 (CFAA). The CFAA permits civil suits for access to a computer followed by an unauthorized damaging action. The CFAA is also a criminal statute that defines a number of different computer crimes.

Even if a valid password is used to gain access to a computer, taking damaging action in excess of a user’s authorization is forbidden. Unauthorized actions include obtaining information “fraudulently” or damaging a computer or computer data. Taking data for the employee’s own purposes and to the detriment of the computer owner is “fraudulent.”

Until this year there had been some doubt as to whether a violation could be made out if a user entered a computer with a valid password. This year, the Ninth Circuit Court of Appeals, which covers California and a number of other states, interpreted the CFAA to put this doubt to rest. A password provides authorization for a user to enter a computer. However, it does not allow a user to do anything he or she wishes once access has been gained. An employee “exceeds authorized access” by violating the employer’s rules governing conduct after gaining access to the computer by, e.g., stealing or damaging files.

Setting the Limits of Authorization

Authorization must be defined. Otherwise, it cannot be exceeded.

To be protected, an employer must have published a computer access policy, e.g., in the employee manual, which defines conditions for entry into a computer and which limits actions that may be taken once conditions for entry have been met. Employees must be aware of the policy.

An employer can provide copies to employees, and have employees acknowledge in writing that they have received and understand the policy. Some employees may feel like they are being treated like suspicious characters. However, a policy need not create an adverse relationship. The policy can be presented as a tool for working with employees as trusted team members who are being provided with clear computer use standards. The rules protect the company’s business and the employees’ jobs.

The policy should be tailored to the company’s business. Some companies will need to allow remote access by many employees and perhaps by many customers. Other companies may need to have servers with very rigorous controls. One example of a computer use standard is, “Employees are not authorized to download any Company data onto any computer or memory media not owned by the company.”

Many cases of unauthorized access have been detected. Ignoring this issue could be costly. However, the cost of working with counsel to establish an internal system for establishing protection under the CFAA is small, especially compared to the value of programs and data which may form the entire basis for a company’s revenue. It is up to an employer to take appropriate steps to ensure protection under the CFAA.

Companies and inventors will have to develop new systems for tracking their newly developed products and methods and for documenting them to the Patent Office. On September 16, 2011, the “America Invents Act” became our patent law. The system that, since the Patent Act of 1839, had allowed U.S. inventors great flexibility in publishing technical data and selling products before they had to file a patent application was swept away.

Small to mid-sized companies can respond to the change in the patent regime to maintain their intellectual property rights competitive position by using new strategies in preparing and filing provisional patent applications.

Novelty of an invention is a requirement for patentability under both the old and new laws. However, the definition of novelty is now quite different. Under the old law, an invention did not cease to be novel until one year after the invention was offered for sale, published by the inventor, published by someone else independently, or publicly used. This one year term was referred to as the “grace period.”

The grace period has been largely eliminated by the new law. An invention may still be novel if an inventor makes a public disclosure before filing a patent application. Rules relating to the effect on novelty of publications by others or of sales by the inventor prior to filing a patent application are not crystal clear. It will probably take the courts several years to formulate clear, consistent rules. However, if an inventor files a patent application first, the publication or the sale does not affect patentability.

It is prohibitively expensive and impractical to file a non-provisional patent application on each invention before its potential is known. Fortunately, it is not necessary. The patent law permits filing of provisional patent applications. These documents do not have formal requirements. The filing fee is low. It will be about $125.00 for a small company or individual after the Patent Office adds its new surcharge to current fees.

Provisional applications must disclose the subject matter for which the inventor desires to establish a filing date. This can usually achieved by preparing the provisional patent application as a technical paper. The inventor can write this paper in order to minimize costs. However, it is very important to consult technically qualified counsel. Inventors are often so knowledgeable that they will skip steps in the description. They can also make assumptions that need to be spelled out in a description. If details are left out, the entire purpose of the provisional patent application can be defeated.

Many strategies for cost-effective use of provisional patent applications can be developed. For example, more than one invention may be included in one provisional application. A whole system may be described, and it will not be necessary to separate descriptions of interrelated inventions in the system. Updated versions of provisional applications may be filed periodically.

While the ability to file freely may remain a dream for those who are not IBM or Microsoft, wise use of provisional patent applications will keep small to mid-sized companies in the game.

The White House has announced a new policy to improve the business climate for contractors that are small businesses. Agency heads are directed to begin paying invoices of prime contractors that are small businesses within 15 days.

An Office of Management and Budget (OMB) Memo of September 14, 2011 informs heads of government agencies that accelerated payment is necessary to provide small businesses with a more predictable stream of resources. This will work to preserve and increase small business participation in Federal contracting, benefitting both the Federal agencies and taxpayers.

Agencies must inform OMB by November 1, 2011 of their implementation schedules. Asking when the respective agency will begin accelerating payment may be a diplomatic way to make sure your contracting officer is aware of the new policy.

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